Peloton Interactive Inc., founder and CEO John Foley stepped down following the company’s recent plunge in profitability. Barry McCarthy, who was announced as his successor, will also serve as the company’s president.

Peloton announced in its second-quarter letter to shareholders a net loss of $439 million and lowered total revenue ranging between $3.7 billion and $3.8 billion in its full fiscal year for 2022.

Once seen as a pandemic success story with its rising sales of stationary bikes and treadmills due to the work-from-home shift, the company has now laid off about 20% of its workforce to reduce costs.

Peloton is implementing a comprehensive restructuring program for which 2,800 employees will be let go. The company is also cutting off or reducing several manufacturing operations, including the $400 million Peloton Output Park plant in Ohio, its North American warehousing and first-party logistics operations.

Peloton is expected to save $800 million in annual costs through the restructuring program.

During the all-hands meeting that announced McCarthy as the company’s new CEO, employees left angry comments regarding the layoffs and accused the leadership of mismanagement, according to messages obtained by CNBC.

“I’m selling all my Peloton apparel to pay my bills!!!” one person wrote in the chat box, while another wrote that this was “awfully tone deaf.”

Peloton offered cash compensation and extended healthcare coverage and career services to help impacted individuals.

In a moment that took courage to admit, Foley announced in a note to Peloton staff on Feb. 8 that he will be moving to a new role as Executive Chair, seeing the need for a change in leadership in the company to continue growing post the pandemic.

“We’re also taking a clear-eyed look at our culture and, if we’re honest with ourselves, we see some things that need to change,” Foley said in the note. “One of these things is optimizing processes for making decisions — which includes creating more space for debate to get to the right decisions, empowering the right folks to be decision makers, and supporting decisions once made so we can enhance our execution.”

McCarthy, a former chief financial officer at Spotify Technology SA and Netflix Inc., brings decades of experience in building successful content-driven subscription business models to Peloton.

“This appointment is the culmination of a months-long succession plan that I’ve been working on with our Board of Directors, and we are thrilled to have found in Barry the perfect leader for the next chapter of Peloton,” Foley continued in the note. “I look forward to working with him and invite you to welcome him with open arms.”

Following the changes in leadership, Peloton saw a 25% increase in shares, closing at $37.27 per share on after opening at $30.25 per share on Feb. 8.

After 10 years of co-founding the company and leading it as its CEO, Foley faced calls for his removal by activist investment manager Blackwells Capital, which owns less than 5% in stake in Peloton, in a letter to Peloton’s board of directors.

In its letter Blackwell also urged the Peloton to consider putting itself for sale, as “the Company is on worse footing today than it was prior to the pandemic.”

Giants like Amazon Inc., Nike Inc. and Apple Inc. have been reported to have an interest in Peloton, according to CNBC.

However, McCarthy is in it for a “great comeback story” as he told Peloton’s employees in an email sent on the same day of his appointment.

“We have to be willing to confront the world as it is, not as we want it to be if we’re going to be successful,” McCarthy wrote in the memo, which was obtained by CNBC. “And now that the reset button has been pushed, the challenge ahead of us is this … do we squander the opportunity in front of us or do we engineer the great comeback story of the post-Covid era?”